Analyst - PAGES

Tuesday, September 29, 2020
Mechanical Lloyd
to delist from GSE
MECHaNICaL Lloyd PLC
its announced the
intention to de-list
from the Ghana Stock
Exchange, which is
subject to shareholders approval, and
approval from the GSE and the Securities
and Exchange Commission (SEC).
at the end of the process, this will
bring the total number of companies
de-listed from the bourse over the
past three years to seven – some
voluntary, some enforced. Even more
worryingly for stock market
managers and regulators, this will be
the second delisting in a one year
period, with PZ Cussons now in the
last stages of its own delisting. This
will reduce the number of companies
listed on the bourse to 30.
Currently, PZ Cussons Ghana
Limited is in its advanced stage of delisting,
with the commencement of
the settlement of successful tenders
as part of the de-listing process from
the bourse.
Mechanical Lloyd’s proposed delisting
marks a departure from passed
voluntary exits from the GSE, all of
which involved companies majority
owned by foreign multinationals.
In the other cases, accra Brewery and
PZ, the foreign majority owner opted for
…following on the
heels of PZ Cussons
delisting in order to see major new long
term investments through – including
reinvestment of profits for several years
• Mechanical Llod office
thus meaning no, or minimal, dividend
payouts -which would not secure
minority shareholders approval
However Mechanical Lloyd is a largely
indigenous Ghanaian company, without a
controlling foreign institutional
shareholder. So far no specific reasons
have been offered for the decision to
delist nor have plans for the future of the
company been revealed.
The company is a leading vehicle
distributor in Ghana which the franchise
to distribute Land Rover and BMW
vehicles as well as some brands of
agricultural machinery.
Its performance on the GSE has been
fairly good, and though not actually
regarded by investors as a blue chip stock,
it has nevertheless been generally
regarded as a good equity investment.
a statement issued by Mechanical
Lloyd to its shareholders indicate that
as part of the upcoming annual
General Meeting scheduled on
October 15, 2020, a resolution will be
put before them with regards to the
proposed de-listing.
Currently, Mechanical Lloyd has a
total of 50.10 million shares issued on
the bourse, with a total market
capitalization of GHc 4.51 million.
“The proposed de-listing is in line
with Mechanical Lloyd’s strategy to
review its business model and
structures to re-position the
Company going forward. The
proposed de-listing will not impact
job security, day-to-day operations
and relationships with stakeholders,”
the statement said.
Mechanical Lloyd will provide
shareholders and the general public
with further information on the delisting
if the resolution to de-list is passed
by the Company’s shareholders
age 3
3-Year Bond fails to raise expected GH¢1.5b
GOVERNMENT’S
EXPECTaTION of realizing
GH¢1.5 billion from its latest
three-year bond issuance could
not materialize as it fell short
by about GH¢676.36 million.
It was able to raise
GH¢823.64 million for the cedidenominated
debt instrument
which was auctioned at an
interest of 19.0 per cent and
this would be paid semiannually
till it matures in 2023.
according to analysts,
government’s expectation
could not be met because of the
tight conditions visited on the
market by the global pandemic.
Since the outbreak of the
coronavirus pandemic the
government has, been
accepting all bids for all bonds
so far issued.
….at 19% coupon rate.
• Ken Ofori-Attah, Finance Minister
The three-year debt
instrument was issued to help
the government to finance its
fiscal operation to the tune of
GHc1.5 billion. The government
may possibly re-open the issue
through a tap opening before
the end of the year. However to
attract more subscription from
investors, the offered yield may
have to be raised.
Market analysts have
indicated that foreign
participation in the domestic
market since the coronavirus
emerged has witnessed a
drastic fall, as has been the
trend in all other frontier
markets the world over.
The yield to maturity for
this bond is also higher than
the interest rate for the twoyear
bond auctioned in august.
Investors thus have adopted
a risk adverse position and
asked for more interest on
Government of Ghana
securities because of the risk to
the economy, even though a
book building approach is used
for the pricing of the
instruments.
The joint book runners for
the government instrument
were absa, databank, Fidelity,
IC Securities and Stanbic.
as at the end of June this
year, government’s debt had
shot up to about GH¢255.7
billion representing 66 per cent
of Gross domestic Product.
Close to GH¢26 billion is
billed to be spent on interest
payment for this year, after it
was reviewed from GH¢24
billion initially.